French 2014 deficit smaller than expected, growth at 0.4%

26th March 2015, Comments 0 comments

France's public deficit increased by slightly less than expected in 2014, while growth in the eurozone's second biggest economy was confirmed at 0.4 percent, the same as in 2013, the Insee statistics agency said Thursday.

Last year, France's deficit was equivalent to 4.0 percent of gross domestic product (GDP), smaller than the 4.4 percent originally projected, and compared with 4.1 percent in 2013, Insee said in a statement.

The slightly improved result "has opened the possibility to revise lower the public deficit for 2015, at around 3.8 percent of GDP," instead of the 4.1 percent previously estimated for this year, Finance Minister Michel Sapin said in a statement.

The new deficit projection would put France below the target recently set by Brussels of 4.0 percent of national output for this year.

The European Commission had given Paris two more years, until 2017, to bring its deficit below the EU's ceiling of 3.0 percent of GDP. Its other targets were 3.4 percent in 2016 and 2.8 percent in 2017.

"The government is totally confident in its ability to bring the public deficit under 3.0 percent by 2017," Sapin said.

France's deficit last year came in at 84.8 billion euros compared with 86.4 billion euros in 2013, which Insee said was due mainly to a decline in investments by local communities.

The French economy expanded in 2014 at the same rate as the year before, 0.4 percent, Insee confirmed on Thursday.

The government has so far been unable to kickstart much-needed growth in a country beset by record unemployment.

President Francois Hollande has launched a two-pronged attack to tackle joblessness and push for growth.

The first is known as the Responsibility Pact, a series of tax cuts for businesses in return for job creation.

The second is a package of reforms aimed at opening up France's closed economy, including extending the number of Sundays per year when stores can open their doors.

Most economists believe that France needs a growth rate of around 1.5 percent to create jobs.

Sapin has disputed this, saying just 1.0 percent growth -- the target for 2015 -- is needed.

Consumer buying power increased by 1.1 percent last year after having stagnated in 2013, Insee also reported Thursday.

© 2015 AFP

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